Pyrrhic victories: the cost to the board of ousting the CEO

Going against anecdotal evidence and common perception, the findings presen ted here show that boards who take action against their CEOs do so only at great cost to themselves, winning only a pyrrhic victory. Indeed, the findi ngs presented show three distinct levels of board turnover. Normal attritio n in periods of continuity produced a turnover of 10.99 per cent over two y ears; routine retirement exists (22.35 per cent) produced a similar turnove r level to forced exits which did not imply a failure of the board to perfo rm its monitoring function (25.36 per cent). However, forced CEO exits whic h implied a failure in the board's monitoring and advising roles caused a d ramatically higher level of subsequent board turnover (40.55 per cent). The se findings demonstrate that is not only the CEO that is forced to sacrific e his or her job when a company is in distress, but that the board is also accountable for its failure to perform its monitoring and advising duties a dequately. Copyright (C) 1999 John Wiley & Sons, Ltd.